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Richard Edelman: 'Don't surrender to the ad agencies. We fight'

Richard Edelman: 'Don't surrender to the ad agencies. We fight'

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Business consultancies such as McKinsey and Accenture Interactive are known to be giving traditional advertising networks a run for their money as they build up on their offerings to include digital and media services. While this might seem like a challenge concerning only ad agencies, PR agencies and professionals should not be resting on their laurels, especially since many of them are also offering other services including digital and content marketing, aside from PR.

In a recent fireside chat at MARKETING-INTERACTIVE's PR Asia 2021, Edelman CEO Richard Edelman (pictured right) said among all the business consultancies, Accenture is "the one that is the most risky for [the PR] category" because they have doubled down on the digital offering by naming David Droga as CEO in August this year.

"On the corporate side, we have more incursions, which is to say McKinsey, Boston Consulting Group and others are trying to enter our space. We have to fight back hard. I don't think we should just sit there and say, 'Oh well, they are superior people,'" Edelman said. He explained that these business consultancies look at problems very differently and have a very high price point.

"They have a team of people who are able to think strategically but not act quickly, and I have been on teams with them in crisis situations. I like that our advice is pointed, fast, and more action-oriented," Edelman explained, adding:

Don't surrender, not to the ad agencies. No way, we fight.

Edelman's reasoning was that PR has prospered relative to advertising, especially during the pandemic. "PR went down less and has recovered faster. And you'll see that the numbers for this year for PR agencies will be quite strong. That's because what we do is essential, it's not optional," he said.

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According to Edelman, it is essential because PR agencies and industry professionals speak across stakeholders, covering brand and corporate reputation. "The smart ones recognise that in healthcare, financial PR, and tech, in particular, we are urgent in order to provide connectivity to their people and to their customers," he said.

This trend is present in traditional network agencies. Omnicom Group's PR segment, for example, fared better than advertising during the third quarter of 2021 ended 30 September compared to the same period last year. Its PR unit raked in US$359.4 million in revenue compared to US$325.6 million. On the other hand, its advertising unit raked in US$1.82 billion compared to US$1.83 billion last year.

Despite this, ad agencies still seem to be encroaching into the PR space. "If you look at the Cannes Lions, the ad agencies win a lot in our category, it makes me crazy," Edelman said. This year, the PR category was dominated by winning agencies including Grey, DDB, dentsu, and FCB Interface in Asia Pacific. He said:

I don't define creative and advertising as in any way superior to PR, I actually think it is inferior. I think our ideas actually prompt action.

One example was its work with Japanese company Ajinomoto in New York. At the start of the pandemic, the agency's creative team realised that sales at Chinese restaurants were plummeting, causing them to shut at a rapid pace. Hence, Ajinomoto and Edelman decided to take action by using the hashtag #TakeOutHate and creating unbranded, celebrity-driven videos that included clips of celebrities self-recording themselves over Chinese takeout in their own homes. They included Margaret Cho, Harry Shum Jr., Jenny Yang, and Gail Simmons. These celebrities also shed light on the xenophobic food phenomenon and urged followers to support their favourite local Asian-owned restaurants.

The agency's website showed that to date, over 2,500 unique Asian restaurants have been spotlighted by supporters of the campaign. The campaign also received 1.3 billion media impressions, and a 53% increase in positive sentiment towards Asian businesses. There were also five million video impressions. "So that's my point about the kind of creative that we do in PR. It's fast. It sees the real world and does something about action," Edelman said.

Despite PR being a valuable asset to companies, there is still a trend, especially in Asia, of PR teams reporting into the marketing teams. To change the tide, Edelman said PR teams need to empower the chief communications officer with information. For example, the agency found that going into COP26 that businesses were far less trusted than governments to solve environmental problems. This was "a complete contradiction" to what we saw in January and again in May, in general around the world, Edelman said, which was that there was more trust in businesses than in the government.

"This is something that the chief communications officer can use in the corner office. We also have to actually work with the CMOs and give them quality information, and give them reasons to use us that move the brand and make sales, just like the Ajinomoto example," Edelman explained. 

Being independent allowed Edelman to evolve

The global communications firm was founded in 1952 by Dan Edelman and has since grown to over 6,000 employees in more than 60 offices including Singapore, Hong Kong, Malaysia and Indonesia. "We are a communications firm now, not just a PR firm," Edelman said. Since its founding, the agency has remained independent and expanded its capabilities to include business marketing, data security and privacy, digital, brand, social impact, brand journalism, digital transformation, research and data analytics, experiential marketing, sustainability, start-up development, and predictive intelligence, among others.

In a 2018 interview with CNBC, Edelman said his father had received an offer to be acquired by DDB but did not want to sell the company. Subsequently, Edelman joined his father in building up the agency and has since managed to keep the business in the family.

"The most important thing to both my father and me was the work. It wasn't the money. And also we really felt that PR firms needed to court and chart their own course, that we didn't want to be the junior partner in the big company. And I think what you see is that our strategies actually worked," Edelman explained. 

According to him, a quarter of the agency's employees are now in data, digital, creative, planning and influencer. He added that if Edelman were to be part of a holding company, it would be a lot harder to expand into these different capabilities. "We've invested for the last seven years, adding 1,500 people into these areas. There is no way, with the margin impact that would have happened in a holding company. So we have evolved because we stayed private and family-owned," he added.

At the same time, the industry is constantly evolving, with new focus areas, buzzwords, and trends such as sustainability, gaming, and the metaverse. When asked how agencies can build a model that incorporates all these specialisms, Edelman said that is "the hardest thing" because traditional holding companies have been built on verticals, from PR to advertising. Clients nowadays prefer teams that are integrated and across the board, which is what Edelman is trying to achieve. 

"Edelman is all about the client teams, that's the first. We are also about geographies, practice areas, and creative. So we have to make sure that it's first for the client and the geography will help us deliver on that. As for the creative, ideas, and practices, ensure that those are really great in terms of execution. It's complicated, it's like having a symphony," he explained.

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